Online search giant Google Inc., has quietly launched a new phase of its offline media expansion strategy: a pilot test to gauge whether Google’s online advertisers will bid for advertising space in major consumer magazines.
Google is giving advertisers a chance to bid online for space in 28 magazines, part of an effort to extend its dominance of Internet search advertising to print.
As part of the bidding process, Google, based in Mountain View, Calif., is providing circulation and demographic information, along with publication dates for each publication, during the test, marketers participating in Google’s AdWords program, which includes such titles as Martha Stewart Living, Motor Trend and InformationWeek, published by CMP Media, which also owns TechWeb. Advertisers can bid on full-, half- or quarter-page ads.
Customers of Google, the world’s most-used search engine, can choose the size of the ad, where it appears and to specify the maximum amount they would be willing to pay for an ad, according to the company’s Web site.
As part of this effort, we have been conducting a series of tests to determine how we could bring additional value to print advertising, a Google spokesman confirmed, adding, "We are continuing to experiment in this area and are now testing the application of an auction model to print media."
The program reflects Google’s ambition to use online auctions to sell advertising in media beyond the Web. Google began buying space in PC Magazine and Maximum PC last year. The deadline for the bids on the first slate of print ads is Feb. 20, they will be told whether they made a winning bid by March 3, and the first ads will appear in April, according to the Web site.
It streamlines the process for selling print ads, said Gokul Rajaram, a Google product management director. "Our goal with the test was to select a diverse set of publishers." Under the test last year, companies negotiated prices for ads directly with Google without using an auction, he said.
Nearly all of Google’s revenues are from selling ads that accompany search results. Called contextual advertising, the ads automatically chosen for a page depends on the keywords used by the searcher. Advertisers bid on keywords.
Google, however, is working on diversifying its ad business by extending its network beyond the Web to magazines, newspapers and even radio. The search engine in January agreed to acquire radio-advertising company dMarc Broadcasting in a deal that could be worth more than $1.1 billion over three years. The final cost will depend on the company’s performance.
Also in January, Google was running ads in the Chicago Sun-Times, which was the first newspaper to participate in the company’s test of offline advertising, which started late last year with several magazines, including Maximum PC, Budget Living and PC Magazine.
The ads in the Sun-Times were similar to Google’s text-based AdWords advertising found on search results. The ads included the words "Ads by Google," at the top, and ran in the sports and business sections.
The pilot is part of a Google’s ambitious plan to provide advertisers with inventory beyond online search ads. Google Vice President of Advertising Sales Tim Armstrong indicated at a keynote address for a Software & Information Industry Association conference last week that the company intended to further expand into traditional media.
The notion is, we are able to help advertisers break into other media, such as print, radio, and other areas, which will help the publishers themselves, do better yield management, Armstrong said. "Our advertisers and publishing partners want to run their ads everywhere that makes sense for them, as long as it is profitable."
Google would like to be the mechanism advertisers use to place ads across virtually all media, Ben Schachter, an analyst at UBS, said. Investors are "taking a wait-and-see attitude as to whether this can turn into a real business," he said in an interview.
Clients seeking print ads can see the circulation of the publications they are interested in, as well as demographics of the readership, including average household income and age.
Search expert Gary Stein said the move indicates that Google is ready to move beyond search ads. "This really does not have much to do with organizing the world’s information. This is them saying they have strong relationships with advertisers, so let’s see what other kind of products we have to sell them," he said. "It sort of signals Google is one more piece that they are moving their way towards being this full-service advertiser."
Stein noted that, while built on an auction-based model similar to AdWords, the print ad pilot is not especially "Google-esque." "They are just selling an ad–meaning there is no targeting behind it, there is no keywords, there is no analytics behind it, he said. How do you optimize, how do you get greater targeting–all that stuff you like from Google–this is not really like that."
Google, whose stock more than doubled–last year, is seeking new markets to sustain growth. Magazines garnered 4.7 percent of U.S. advertising last year, more than the 2.8 percent for the Internet, according to market researcher EMarketer. Newspapers, another market that Google is testing by placing ads in the Chicago Sun-Times, accounted for 17.6 percent.
We do not know exactly how it will work, Google founder Sergey Brin said on a conference call with analysts last month, referring to the print advertising plan. "Advertisers want greater access, better accountability."
Brin said that while he is optimistic there is demand for print ads sold over the Web, he could not forecast that Google will be successful.
Hundreds of publications have expressed an interest in being part of Google’s print advertising program, Brin, 32, said on an earlier conference call in October.